‘Du30nomix’

I had the pleasure last Tuesday of moderating a forum on “DuterteNomics,” the new brand dreamed up by the clever young minds at the President’s communications office. It was held at the new Conrad hotel beside the SM MOA in Pasay City, where you’re greeted with a stunning view of Manila Bay as you emerge into the lobby from the parking garage lift.

That view alone is enough to perk up one’s spirits before you enter one of the function rooms where the forum was held. I’m assuming it put the participants in a properly optimistic mood to hear what the President’s economic and infrastructure advisers had to say.

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The new brand “DuterteNomics” isn’t just clever spin. It isn’t intended just to show that there’s more to Duterte than his unorthodox views on keeping the peace at home and making friends abroad, even if those views were likely what made him the world’s most influential leader last year, according to TIME magazine.

DuterteNomics actually comprises a very specific list of policy prescriptions that deserve a serious look. They include the following:

1. “Build build build”­—The driving proposition is that we have to create nothing less than a “golden age of infrastructure” if we want to do away with structural poverty and become a middle-income nation in one generation. It is infrastructure that will knit our islands closer together and bring investment, trade and tourism to our most rural precincts as well as our most crowded cities.

Fellow UP economists Ernie Pernia (Neda) and Ben Diokno (DBM) plan to spend a whopping P8.4 trillion over the next six years on infrastructure. By the time Duterte leaves office in 2022, infra spending will have gone up from 5.4 percent to 7.4 percent of GDP, which in turn, is projected by IMF to be the fastest-growing GDP in Asean this year and next.

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Among the ambitious projects touching Metro Manila alone, some of which have already started:

Luzon Spine Expressway—Intended to cut travel time between La Union and Bicol to less than 12 hours. This web of road projects includes the North-South Connector Road, also already being built by Metro Pacific, that will let travelers between NLEX and SLEX bypass Metro Manila streets altogether.

PNR North and South Rails —The northbound link spans 100 km. from Tutuban to Clark, while the southbound link will connect first to Calamba and Los Baños, then to the Bicol region. Art Tugade of DOTr is so confident about finishing these projects by 2022 that he promised to move his entire agency from Ortigas Avenue to Clark this July. That’s a whole lot of motivation for his people to do the job quickly, most of whom live in or around Metro Manila.

Metro Manila Subway—Tugade expects the President and Japanese Prime Minister Abe to sign this contract by the year-end. The first phase will comprise 13 subway stations, from Mindanao Avenue in QC to the FTI and Naia in Taguig. It won’t be completely done yet by the time Duterte leaves office, but he ought to be able to experience a subway trip, Philippine-style, at least through a couple of stations.

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2. “We can do this ourselves” —Gone are the doleful years of the previous administration, which completed only one PPP project per year and canceled Arroyo-initiated projects left and right—sometimes illegally so, as ruled recently by an international arbitrator in the case of the Laguna de Bay road dike project.

When PNoy left office, his people boasted about leaving behind a trillion pesos in unspent budget. That’s like a father leaving his children in rags, unfed, unschooled, and homeless, then boasting about all the money he put away in the bank. Only a banker would love someone like that—and it’s exactly why the man was such a favorite of the rating agencies, who care only for lenders and creditors.

If PPP is so difficult to put together, then, why doesn’t government just plan, build, and finance the infrastructure itself? That’s the question Duterte’s economic team asked. After all, the country has been awash in dollar-based liquidity from OFW and BPO earnings. Global interest rates and inflation are still low (though slowly rising), and the peso recently posted its strongest rally in over two years.

The answer to the above question would be unambiguously “yes” in the case of uncomplicated projects like roads, bridges, and seaports. It would still be positive even with more complicated variables like railway rolling stock and airplanes. But these projects present a number of challenges the Duterte team has agreed to accept, which make up the other side of the DuterteNomics ledger:

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3. “We will go into debt at home to pay for our infrastructure”—Budget Secretary plans to run an annual budget deficit of 3 percent of GDP starting next year in order to finance these projects. It is possible for him to do this now, with stable public finances and low debt ever since the tax reforms initiated under both Arroyo and Aquino II.

4. “We will go into deficit abroad to pay for our infrastructure”—For the first time in many years, our current account last quarter swung from surplus to deficit. But this can be managed in light of our foreign exchange reserves and a strengthening peso, which allows us to import infrastructure components for less money.

5. “We will reform our tax system in order to ‘pay as you go’ ”—As discussed in an earlier column, the comprehensive tax reform package now pending in Congress is the best way for us to raise the additional taxes needed to pay for infrastructure out of pocket, while at the same time easing the tax burden on our middle class and poor.

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At the end of the day, of course, PowerPoint promises are easy enough to make. We certainly saw enough of that with the unlamented likes of Roxas and Abaya.

This is why perhaps the most important announcement at the forum came from Presidential spokesman Ernie Abella: The rollout of a Philippine Infrastructure Transparency Portal that will allow any citizen to track online the progress of every one of these projects.

The portal is being built at www.build.gov.ph. Check it out, use it or lose it. Whether or not we use this access is what will make all of us—not just Duterte, nor his Cabinet, nor their foreign and private partners alone—responsible for success, or complicit in failure.

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